Friday, July 10, 2009

360 Degrees Performance Appraisal

Contemporary 360-degree methods have roots as early as the 1940s, however, there is some disagreement regarding the exact genesis of the technique.

Despite these disagreements, one point that most scholars can agree on is 360-degree performance appraisal has historical roots within a military context.

During the 1950s and 1960s this trend continued in the United States within the Military service academies.

At the United States Naval Academy at Annapolis, the midshipmen used a multi-source process called “peer grease” to evaluate the leadership skills of their classmates.

In the corporate world during the 1960s and 1970s, organizations like Bank of America, United Airlines, Bell Labs, Disney, Federal Express, Nestle, and RCA experimented with multi-source feedback in a variety of measurement situations.

The Concept

For example, subordinate assessments of a supervisor’s performance can provide valuable developmental guidance, peer feedback can be the heart of excellence in teamwork, and customer service feedback focuses on the quality of the team’s or agency’s results.

The Process

The Appraisers

Superiors

It’s Contribution:

The 1st line supervisor is often in the best position to effectively carry out the full cycle of Performance Management.

The supervisor may also have the broadest perspective on the work requirements and be able to take into account shifts in those requirements.

Cautions to be addressed:

Superiors should be able to observe and measure all facets of the work to make a fair evaluation.

Supervisors should be trained. They should be capable of coaching and developing employees as well as planning and evaluating their performance.

Self

It’s Contribution:

Self-ratings are particularly useful if the entire cycle of performance management involves the employee in a self-assessment.

The developmental focus of self-assessment is a key factor.

Approximately half of the Federal employees in a large survey felt that self-ratings would contribute “to a great or very great extent” to fair and well-rounded PA.

Self-appraisals are particularly valuable in situations where the supervisor cannot readily observe the work behaviors and task outcomes.

Cautions to be addressed:

Research shows low correlations between self-ratings and all other sources of ratings, particularly supervisor ratings. The self-ratings tend to be consistently higher. This discrepancy can lead to defensiveness and alienation if supervisors do not use good feedback skills.

Sometimes self-ratings can be lower than others’. In such situations, employees tend to be self-demeaning and may feel intimidated and “put on the spot.”

Self-ratings should focus on the appraisal of performance elements, not on the summary level determination. A range of rating sources, including the self assessments, help to “round out” the information for the summary rating.

Peers

It’s Contribution:

Employees report resentment when they believe that their extra efforts are required to “make the boss look good” as opposed to meeting the unit’s goals.

Peer ratings have been an excellent predictors of future performance and “manner of performance”.

The use of multiple raters in the peer dimension of 360-degree assessment programs tends to average out the possible biases of any one member of the group of raters.

The increased use of self-directed teams makes the contribution of peer evaluations the central input to the formal appraisal because by definition the supervisor is not directly involved in the day-to-day activities of the team.

The addition of peer feedback can help move the supervisor into a coaching role rather than a purely judging role.

Cautions to be addressed:

Peer evaluations are appropriate for developmental purposes, but to emphasize them for pay, promotion, or job retention purposes may not be prudent always.

Generally, the identities of the raters should be kept confidential to assure honest feedback. But, in close-knit teams that have matured to a point where open communication is part of the culture, the developmental potential of the feedback is enhanced when the evaluator is identified and can perform a coaching or continuing feedback role.

It is essential that the peer evaluators be very familiar with the team member’s tasks and responsibilities.

The use of peer evaluations can be very time consuming. When used in PA, the data would have to be collected several times a year in order to include the results in progress reviews.

Depending on the culture of the organization, peer ratings have the potential for creating tension and breakdown rather than fostering cooperation and support.

Subordinates

It’s Contribution:

A formalized subordinate feedback program will give supervisors a more comprehensive picture of employee issues and needs.

Employees feel they have a greater voice in organizational decision-making.

The feedback from subordinates is particularly effective in evaluating the supervisor’s interpersonal skills. However, it may not be as appropriate or valid for evaluating task-oriented skills.

Combining subordinate ratings, like peer ratings, can provide the advantage of creating a composite appraisal from the averaged ratings of several subordinates.

Cautions to be addressed:

The need for anonymity is essential when using subordinate ratings as this will ensure honest feedback.

Supervisors may feel threatened and perceive that their authority has been undermined when they must take into consideration that their subordinates will be formally evaluating them.

Subordinate feedback is most beneficial when used for developmental purposes. But precautions should be taken to ensure that subordinates are appraising elements of which they have knowledge.

Only subordinates with a sufficient length of assignment under the manager should be included in the pool of assessors. Subordinates currently involved in a disciplinary action or a formal performance improvement period should be excluded from the rating group. Organizations currently undergoing downsizing and/or reorganization should avoid this source of PA.

Customers

It’s Contribution:

Customer feedback should serve as an “anchor” for almost all other performance factors.

Including a range of customers in PA program expands the focus of performance feedback in a manner considered absolutely critical to reinventing the organization.

Cautions to be addressed:

Generally the value of customer service feedback is appropriate for evaluating team output (there are exceptions).

Customers, by definition, are better at evaluating outputs as opposed to processes and working relationships.

It is a time-consuming process.

Important factors in 360 degree feedbacks

The mission and the objective of the feedback must be clear.

Employees must be involved early.

Resources must be dedicated to the process, including top management's time.

Confidentiality must be assured.

The organization, especially top management, must be committed to the program.

These programs tend to be somewhat shocking to managers at first. Amoco's Bill Clover described this as the "SARAH reaction: Shock, Anger, Rejection, Acceptance, Help".

The problems may arise with subordinate assessments where employees desire to “get the boss” or may alternatively “scratch the back” of a manager for expected future favors.

The organization implementing this type of performance appraisal must clearly define the mission and the scope of the appraisal. Otherwise it might prove counter productive.

One of the reason for which 360 degree appraisal system might fail is because the organizations attempt to assimilate the 360-degree method within a traditional survey research scheme. In traditional survey research, investigators attempt to maximize data collection with as many items/questions as possible and with large sample sizes. In the case of 360-degree appraisal, creating measurement instruments with many items will substantially increase non-response errors. In addition, large sample sizes are not typically possible considering that perhaps 4 or 5 sources will rate an employee’s performance. As such, statistical procedures that rely on large sample sizes in order to ensure statistical validity might not be appropriate.

Organizations must consider other issues like safeguarding the process from unintentional respondent rating errors.

The culture shock that occurs with any system that creates “change.” And especially with a modern system like 360 degree performance appraisal; must be taken care of.

Conclusion

Because many of the more conventional performance appraisal methods have often proved unpopular with those being appraised and evaluators alike, 360 is gaining popularity with many managers and employees.

It offers a new way of addressing the performance issue.

When used with consideration and discipline, feedback recipients will feel that they're being treated fairly.

In addition, supervisors will feel the relief of no longer carrying the full burden of assessing subordinate performance.

The combined effect of these outcomes should result in increased motivation, which in turn improves performance.

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